Volume 18, Number 37 | Jan. 27 - Feb. 2, 2006

Condos will send high-priced renters packing

By Ronda Kaysen

The new owners of a tony Financial District residential tower sent tenants their walking papers this month, telling them leases would not be renewed as the 346-unit building prepares to go condo.

Residents at 25 Broad St. received letters from their landlord, Swig Equities, announcing plans to empty the 21-story building to make way for renovations and a condo conversion. Another landlord letter speculated that apartments would be put on the market for upwards of $1,200 a square foot, tenants said.

“It’s kind of a messy situation,” said tenant Heather Conoboy, whose lease expired this month. Swig offered her an extension until April. “People are a little frustrated because of having to move.”

Swig Equities purchased 25 Broad from Crescent Heights Investments in September. Crescent Heights converted the 1901 city landmark, known as The Exchange, in 1997 from an office tower to a luxury residential rental, and put it on the market last April. It was widely speculated at the time that a new owner would convert it to condos.

“We knew that the likelihood of lease renewals was remote,” said tenant Vicki Cheikes whose lease expires in July 2007. Cheikes, a real estate lawyer, and her husband plan to move to Florida at the end of their lease. “For us, it’s kind of worked out well. It’s like ‘This is your day.’”

Condo conversions must be approved by the State Attorney General’s office and during that time a property owner is barred from marketing the property. Swig plans to renovate the apartments while the Attorney General considers the condo application. In order to renovate, the apartments must be vacant. “It’s a very awkward situation,” said Swig Equities president Kent Swig. “Your natural buyers are the people living in the building, but you’re not allowed to market the building in any way shape or form…. It makes it very difficult.”

So instead, tenants whose leases expire during silent period of the conversion process — which could take up to a year, said Swig — will not be able to renew.

So far, “It’s all been amicable,” said Swig, adding that his company — one of the largest commercial realtors Downtown — is providing tenants with a broker to help them relocate.

“It’s not an uncommon thing that’s going on. It’s part of an actual market ebb and flow. We’re just not repopulating the building,” said Swig, who estimates that in any given year between 30 and 35 percent of tenants opt not to renew their leases.

In this case, 100 percent of the leases won’t be renewed.

Tenants appear more stunned by the projected selling prices — $1,000 to $1,200 a square foot, tenants say — than being asked to leave.

“The prices they’re asking are ridiculous,” said Cheikes, who pays $3,800 a month for her two-bedroom, two-bathroom apartment. “We laughed.”

“Everyone thinks that what they’re asking is overpriced,” said Conoboy, who received a letter from Swig saying that her fourth floor one-bedroom, which she described as dark, would be marketed for $720,000. “It’s crazy — there is no way my apartment is worth that.” She currently pays $2,335 a month for it.

One tenant not immediately affected by the turnover is Bruce Menin, managing principal of Crescent Investments who rents a penthouse apartment. “We’re staying for now. We’ll see what happens,” said Menin’s wife, Julie, who is also chairperson of Community Board 1. The non-profit she founded, Wall Street Rising, is housed at 25 Broad. The Menins have four years left on their lease.

Menin said she had not received the letter the other tenants had received. “I don’t hear anything about their plans. We don’t control what they [Swig] do,” she said.

The tenants Downtown Express spoke with for this story seemed resigned to eventually moving, although some worry that as their leases came do, they might face increasing pressure from Swig. “From what I hear they want everyone out by June and they’re asking people to leave by June,” said Wendy Benson, a tenant whose lease expires in September. Tenants whose leases have already expired “are starting to get pressure,” she said.

Conoboy, whose lease expired in January, told Downtown Express her relationship with Swig had been amicable so far.

The building is rife with rumors, with tenants worrying the doormen will not have their contract renewed when it expires in April and the full service luxury rental will quickly degenerate into a no-service building.

Swig insists, however, that the luxury tower will remain just that. “All employees are union positions and we would not consider anything but maintaining all services,” Swig said through a spokesperson.

Ronda@DowntownExpress.com


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